EA studio founders may be "victims of cost cutting"

Within the last week at Electronic Arts, we've seen departures at Criterion, PopCap and - just yesterday - Chillingo. These weren't any employees, but actual founders at the respective studios. Sure, it could be coincidental timing at the start of a new year, but it feels like something else is afoot. Some of the analysts that GamesIndustry International spoke with suggested that these recent departures could be related to cost cutting measures in the wake of John Riccitiello leaving and Andrew Wilson taking the helm.

"I think the 'problem' is that since JR left EA, there is a serious focus on cutting costs, which means streamlining organizations and cutting budgets. Some of this is not coincidental at all, and some of the people departing are either victims of cost cutting or are not as enamored of working for a company that is paying attention to costs," Wedbush analyst Michael Pachter told us.

Asif Khan, CEO at Panoptic Management Consultants, agrees. The founders in particular may want to have more creative freedom, and a cost cutting mode at the publisher doesn't fit well with their vision.

"Chillingo was an opportunity generator for EA... EA could use more studios with independent spirit like Chillingo"

Billy Pidgeon

"The turnover at EA seems to be attributable to one of two factors. Whenever there is a change in leadership of a company (especially the CEO), there is usually a flood of employees who leave shortly thereafter. The other factor is that these employees are all founders/entrepreneurs and they may feel that there is more upside to taking their money and starting another new venture than staying at stodgy old EA," Khan explained.

"With Andrew Wilson at the helm, it is possible that some of the folks at the mobile and social divisions of EA are feeling left out of the big picture strategy," Khan added. "These founders of Chillingo, Popcap, and Criterion probably want more control over their projects and starting their own ventures would create more freedom to take the creative, innovative risks that got them acquired by EA in the first place... these entrepreneurs [may] have ideas that they either feel they couldn't properly execute at EA or their strategy would be more profitable in a separate venture. These are proven entrepreneurs and I am sure we will understand their departures from EA as time passes."

RW Baird's Colin Sebastian doesn't think the departures are a big deal. He called them "maybe a yellow flag, probably some end of the year shuffling - not completely surprising for an acquisitive company."

That said, independent analyst Billy Pidgeon did comment that losing the Chillingo founders could have the most negative impact. EA could benefit from more studios like Chillingo, he said.

"Of the three recent studio executive departures at EA, Chris Byatte and Joe Wee leaving Chillingo is the most surprising and could have the most significant negative impact," Pidgeon noted. "Dave Roberts did a great job of leading PopCap as an independent company, but John Vechey was a founder and is more directly involved in PopCap's game creation. PopCap should be able to continue to develop high quality games. There isn't much left of Criterion for Ward and Sperry to work with at EA as most of Criterion's staff has been assigned to Ghost Games to work on Need for Speed.

"Byatte and Wee were running Chillingo much as an independent studio within EA, working with small developers around the world to create unusual mobile games that have been broadening EA's mobile catalog in several markets. Chillingo was an opportunity generator for EA, with the ability and autonomy to fund and direct multiple low cost projects with high potential to break out as new franchises. EA could use more studios with independent spirit like Chillingo. It's a great approach for large publishers to enable creative development for high growth categories like mobile and downloadable games."

We'll be keeping a close eye on EA in the weeks ahead to see what other changes may take place at the publisher. The company will release its third quarter results on January 28.